Omdia: China's healthcare equipment market to hit $600bn by 2025

China, a vast country with a huge population of 1.4 billion, has emerged as the second-largest economy in the world, according to GDP, after its fast growth during the last four decades.

Extended life expectancy, an aging population, and greater expectations about quality of life have driven the China healthcare market to become the second-largest healthcare market in the world, after years of strong double-digit growth.

In 2017, the Chinese government launched the Healthy China 2030 initiative, which outlined strategies in the healthcare sector encompassing the whole healthcare ecosystem, including medical system reform, population health management, and technological innovation. 

Against this backdrop, this Omdia report is designed to provide a regular update on the China healthcare market, covering the latest news about government initiatives, industry dynamics, and macro environment insights. 

The broad coverage of this report aims to offer a wide perspective to help readers identify potential business opportunities and stay aware of the latest trends in a rapidly changing market. 

The National Health Commission of China released Healthcare Development Statistical Bulletin for Year 2020 on July 13th

The annual bulletin presents broad healthcare statistics, covering medical resources, medical services, healthcare expenditure and epidemiology. Even though patient visits dropped by 11% in 2020 due to Covid-19 pandemic, other key measurements of medical resources and healthcare expenditure kept growing last year. Omdia summarizes some of the key insights by drawing from the five-year statistics between 2016 and 2020.

Since 2016, the number of hospitals in China grew at a compound annual growth rate (CAGR) of 5%, which in real terms adds about 1200 new hospitals every year. 

The increase in the number of hospital beds in China presents a similar picture growing at a CAGR of 5.3%, reaching 9.1M in 2020, an increase of 338,000 beds per year since 2016.

Total national health expenditure in China reached 7,230.6 billion Yuan in 2020. With a CAGR growth of 11.8% since 2016, total national health expenditure is estimated to account for 7.1% of GDP, which is its highest ever proportional value.  Healthcare spending per capita achieved a CAGR of 11% between 2016 and 2020, reaching 5146 Yuan in 2020.

Number of Hospital and Health Spending in China between 2016 and 2020

Affluent residents and an aging population spurred demands for healthcare services, which supported China’s healthcare equipment market CAGR of 13.6% between 2015 and 2020. 

But still, China only spends around 20% of the OECD per capita spending level. Total national health expenditure of China accounts for 7.1% of GDP compared to an average of 9.9% in OECD countries. The full potential of the Chinese healthcare market has yet to be realized. As per Ministry of Industry & Information Technology of China (MIIT), China’s medical equipment market is projected to grow at a CAGR of 15% between 2021 and 2015. 

As per Healthcare Equipment Intelligence Service of Omdia, the global healthcare equipment grows at a CAGR of 6-8%. China market will grow at a much faster pace in the coming years.

Chinese medical infrastructure construction is moving ahead at pace

Medical infrastructure construction is a hot term in China. 

Since 2018 the National Health Commission issued multiple documents, urging all grade-two and grade-three hospitals to upgrade facilities with specific equipment types and to increase overall bed capacity.

The Covid-19 pandemic highlighted the insufficient resources and infrastructure of China’s public health system. Since the pandemic, China has invested significantly in new medical facilities. In the latest 14th Healthcare 5-Year Plan released in March this year, the initiatives to support healthcare infrastructure improvement continued.

The 14th Healthcare 5-Year Plan sets targets to strengthen infectious disease prevention and control, build state-level and regional level medical centers, and stipulate that hospitals upgrade facilities.

The provinces and municipal cities drafted and initiated plans to renovate, expand and/or build medical facilities. Shanghai municipal government, which serves 24 million residents, released its major projects for 2021, including 14 medical projects. Kunming, the capital city of Yunnan Province, listed 13 medical construction projects for 2021, with total investment budgeted at 10 billion yuan.

Omdia estimates that between 2021 and 2025, the healthcare equipment market size driven by medical facility and infrastructure investments in China will reach 600 billion US dollar. The demand for medical equipment is projected to experience a surge, particularly for categories including respiratory, cardiovascular, neonatal treatment, and medical imaging.

The growing number of medical facilities also attracts non-medical players. Wanda, China’s largest real estate developer by sales, made multiple huge investments in building hospitals since 2016.  Kweichow Moutai Group, the world's most valuable alcohol company, inaugurated a hospital in April, investing 290 million US dollars in the build.

Sally Ye is a health care technology analyst at the Healthcare Technology division of Omdia, a sister news and information portal of Medtech Insight. Located in the US, Europe and China, Omdia’s health care team produces a wide range of syndicated and customized reports, including a monthly China Healthcare Market Update, the Healthcare IT Topical Report, and the Healthcare Equipment Database, as well as in-depth reports and analysis on the medical imaging industry.